Silver prices increased by 1.2% to Rs 1,46,081, reflecting a technical rebound in anticipation of the U.S. Federal Reserve’s policy decision. The Federal Reserve has lowered the federal funds rate by 25 basis points to a range of 3.75%–4.00%. This action represents the second consecutive monthly reduction and establishes the lowest rate level since 2022. Policymakers highlighted increasing downside risks to employment and persistent inflation, reflecting a divergence of opinions among committee members.
In the context of the ongoing U.S. government shutdown, which has now extended into its fifth week, the postponement of critical economic releases is contributing to heightened uncertainty in market sentiment. Trade developments are at the forefront as Trump and Xi are anticipated to conclude a framework this week that may suspend tariff increases and alleviate rare earth export restrictions. On the supply front, substantial silver flows from the U.S. and China to London have alleviated liquidity constraints in the OTC market, where prior metal shortages had caused prices to trade at a premium over Comex futures.
The London Bullion Market Association has disclosed that there are 24,581 tons of silver stored in vaults, with a total valuation of $36.5 billion. Investor appetite continues to exhibit robustness, as global silver ETP holdings have increased to 1.13 billion ounces, a figure that is merely 7% shy of the peak observed in 2021. Retail demand in India experienced a year-on-year growth of 7%, whereas the global silver deficit is anticipated to decrease by 21%, reaching 117.6 million ounces by 2025, as reported by the Silver Institute.
From a technical perspective, silver is experiencing short covering, evidenced by a 0.46% decline in open interest to 19,993 lots, alongside a price increase of Rs 1,739. Support is positioned at Rs 1,44,480; a decline beneath this level may lead to a test of Rs 1,42,880. Conversely, resistance is identified at Rs 1,47,820, with a breach above this threshold potentially driving prices toward Rs 1,49,560.